Business Credit Tiers Explained

Hello, and welcome to this module, business credit tiers explained. So this is going to be really good. I’m going to give you a clear future. So you know exactly where you’re starting and where you’re going. So here’s what I’m gonna cover. Number one, what the business credit tiers system is, tiers one through seven, what’s needed before applying, and then how to take immediate action with this. So, number one, business credit tiers explained. So for the purpose of establishing credit, what I’ve done is I’ve developed a hierarchy or a systematic approach, starting at the smallest tier all the way to the highest tier. And the first tier is going to be the ones that’s going to almost automatically get you qualified and approved for when you apply. And we have to start by building with the lowest tiers first and then build up from near very similar, like on personal credit.

Now, like I was saying before, DUNS number can take up to 30 days according to Dun and Bradstreet. Typically one to two weeks. Now, if you did the paid Dun and Bradstreet, or you may already have one, or if you did the Federal Dun and Bradstreet application process, you probably already have one. So, you don’t have to wait until you have a Dun and Bradstreet number before you can start applying for tier one credit because all you’ll need to do is I’ve already applied. And then once you open up the accounts, you’ll be good to go because you don’t need it in order to get these accounts. Because what they’ll probably do is report that information to Dun and Bradstreet, and then your Dun and Bradstreet number will automatically be issued. So the very first tier we need to start with is tier one vendors, okay?

Because these vendors will not ask for your DUNS number. So the vendors will also, they won’t ask for your DUNS number, but they will report to Dun and Bradstreet and all the other bureaus, based on their relationships with those particular bureaus. And then they’re going to expediate or, or speed up the process to get your DUNS number as well. So the lenders will use your business name and address to the report. And then when Dun and Bradstreet get the reports, they’ll set up and release a DUNS number in that instant if they haven’t already. So that’s why it’s important for us to start with the tier one accounts, assuming your DUNS number has not been issued yet. Now. tier one are what we’re going to say are Net 30 Pre-Paydex accounts. So typically these accounts are going to be what we use to establish a Paydex.

So we don’t have to have any tradelines or any payment experience required with these. Now, one of the ones that you’ve already established indirectly was NAV. NAV is going to establish a tradeline and start reporting that information to Dun and Bradstreet immediately. So you probably already have one report now, which is awesome. So that’s how tier one credit works. And when you get to the tier one account section, I’m going to provide a list of accounts for you to start applying for. But I just want you to understand tier one. Now, once you’ve gotten tier 1, we now can graduate to tier two. Now tier 2 net 30 accounts are going to require a Paydex score. Okay? Now, in order for you to even get tier two, you must have three tradelines reporting first, before you can even apply for these tier 2 accounts.

Okay? And once you have a total of a total of three payment experience reporting to Dun and Bradstreet, Experian and Equifax were primarily Dun and Bradstreet and Experian, these are required first before you can apply for these types of accounts, then, then you’ll see it’s going to be a cycle here. So I’m going to break it down. So when we’ve got tier 1 network tier 2, then once we have tier 2 reporting after about 60 to 90 days, we now can go over to tier 3, which is going to be our store credit. And in order to get store credit, we must have at least five D&B trade lines required before they’ll even consider us. Okay, now we’ll get more into the weeds of what these store credit cards are, but essentially you want to have one on Experian or Equifax and combined tradelines are going to be required as well.

So not to worry, I’m going to provide the tier 3 accounts for you to apply for at that particular point. And then you want to have a total of 6 payment experiences between Dun and Bradstreet , Experian and Equifax required before you can even move on to the next tier. Okay. And then you’ll also want to have one tradeline with at least a $1k limit, which will be very, very, very simple to do when you follow the system. Now that’s tier 3. Now we can graduate over to tier 4 and all it does is just keeps building on itself. Okay. So tier 4, we need to have at least seven D&B tradelines, three Experian plus Equifax, combined tradelines required. And then we wouldn’t have a total of 10 payment experiences or 10 payment references for Dun and Bradstreet , Experian, and Equifax required.

We want to have at least one tradeline with at least a $2K limit, and then we’ll still have that other tradeline with a $1K limit before we can graduate to the tier 4 credit line. Okay. Then we’ll be able to start once we’ve done this at this point, it’s been about, probably about, I would say five months. Now going into month six, we can get to that tier 5 credit, which is going to be a revolving credit. Okay. And this is going to be where we start to get those larger limits, those five to $10K limits. And you may have already gotten larger limits at this point as well. In my experience, I’m not sure if that home Depot card is a tier 4, tier 5, I’ll identify it.

But they approved me for the 15,000 limit. I applied for 30. They said that they needed to go to a higher risk department. And I said, Hey, look, just give me 15k. I’m cool with that. Even though I’ll probably get, I got approved for the higher limit. So anyways, tier 5 revolving credit, we want to have at least 8 D&B tradelines reporting. And then for Experian plus Equifax combined. And then we want to have a total of 12 payment experiences between all three before we move on. And then we want to have at least one tradeline with at least 4k limit. Now you may already like, one of the tier two cards I got approved for early on was with, I want to say that was Quiktrip and they gave me a $2k limit. So again, these limits are going to happen as you follow the system.

Okay. Then once we’ve done tier 6, I mean tier 5, we now can graduate to revolving credit number 2. Okay. And this is going to be meaningful, we want to have at least 10 D&B tradelines reporting on our file. Six Experian plus Equifax. So that’s gonna be a total of 16 payment experience between all the credit bureaus. And then we want to have at least one tradeline with a seven K limit, which at this point you will have that. Now, once you have this, you now can graduate yourself. And you’re going to be getting higher at this point, your limit is going to be getting higher. And then now we can graduate to cash credit. And then this is really, really at tier 5 and up, you may have to start personally guaranteeing some of these in order to get the limits.

But if we follow this system, if you follow the system,you may not because if you follow everything I’m having, but essentially this is the system. Then tier 7, this is going to be our cash credit. And your social security number is almost always going to be required on these.But you want to have 12 D&B tradelines. You want to have 8 Experian and Equifax combined tradelines for a total of 20 payment experience with 23. Now you may have more than this. So you, you should have at least 20, but you may be, you may have 22. You may have 23 because if you’re doing two every two months, two to three months, you should be good, but you want to have a total of 12. I mean, 20 payment experiences and at least one tradeline with the $15K, with the $10K limit.

And this is going to be where you can start to apply for those higher cash limits with specific banks that you can use as cash. And this is what I’m going to call the business credit. Cause remember, before I cover the difference between corporate credit, business credit and business funding, essentially the majority of the tiers, I would say tiers one through 4 and 5 are corporate credit. You don’t really start getting into the revolving credit part two and part three, i.e business credit until you get tier six and tier seven. Now, one of the things I did out of order, because I didn’t understand this system, is I was approved for tier seven cash credit, even before I had the tiers built up. But I had to personally guarantee. Now I’m going back and redoing this. I would have followed this system and process first, then got the cash credit without the personal guarantee.

But when you follow this process, you put yourself in position to where you can limit your personal guarantee as much as possible. However, if you’re at a place where you’re like, Hey, look, I already have good personal credit. And I do want to go ahead and get a higher cash credit tier seven card. And I’m okay personally guaranteeing early on, then that’s perfectly fine, but just know that’s what’s going to happen. Okay. But these are the tiers of credit. I’ll see you in the next module. When I break down the application process and sequence and phases.